Investors sue Citigroup for Enron-related transactions

[Nambe]

AFX-Europe via COMTEX

A group of investors, represented by the Bank of New York, has sued Citigroup for fraud, breach of contract, breach of fiduciary duty and negligence regarding the sale of securities to now-bankrupt Enron.

According to the lawsuit filed on Monday in New York State Supreme Court, Citigroup took part in a "massive scheme of deception" to raise billions of dollars from the plaintiffs. The company allegedly used the money to make disguised loans to Enron and its affiliates to reduce its own "Enron credit risk, prop up Enron, cover up Enron's failing financial condition and generate significant fees in the process," the filing said.

Citigroup created the "Yosemite transactions" in 1999 to raise $2.4 billion in funds that were used to repay Citi's preexisting loans and reduce the company's prior Enron exposure, the lawsuit claimed. ..

The suit alleges that Citigroup realized in the first quarter of 1999 that its total credit exposure to Enron had jumped to about $1.7 billion, more than four times Citi's internally imposed credit limit of $375 million for the energy company. ..

Ride Don’t Drive * * It’s Global Cool